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All half measures to «fix» the housing market are just variations around this theme. If there’s political consensus against the only solution that fixes the roo

by marvin 5y ago

All half measures to «fix» the housing market are just variations around this theme. If there’s political consensus against the only solution that fixes the root cause — building much more — then any other measure to alleviate the problem will be varying degrees of dysfunctional and ineffective. I’d be delighted to be proven wrong, but it seems unlikely.

toomuchtodo 5y ago
What you call dysfunction I would call the market reaching equilibrium. The market is working efficiently if pricing signals cause housing seekers to look elsewhere due to limited supply or market clearing prices beyond their means. For example, not everyone can afford San Francisco, but there is a lot of buildable land besides SF in California (the Central Valley, for instance). Everyone should be housed, but it’s likely it might not be their first choice.
- ChrisLTD 5y ago
  I'd agree if San Francisco was full, but it's possible to build up and increase density so people can live close to their jobs. People per square mile: San Francisco: 17,246.4 Brooklyn: 35,369.1 Manhattan: 69,467.5
  - toomuchtodo 5y ago
    Those jobs can be remote, and it is cheaper to encourage employers economically to support remote work than to reshape entire geographies with housing. Speaking of Manhattan: https://www.nytimes.com/2021/07/01/nyregion/manhattan-vacant-office-space-real-estate.html https://www.nytimes.com/2021/07/01/nyregion/manhattan-vacant... (Office Vacancies Soar in New York, a Dire Sign for the City’s Recovery; Nearly 19 percent of all office space in Manhattan has no tenants — the highest on record — as companies shed leases and embrace remote work.) https://www.bloomberg.com/news/articles/2020-12-05/even-before-covid-2-600-people-a-week-were-leaving-new-york-city https://www.bloomberg.com/news/articles/2020-12-05/even-befo... (Even Before Covid 2,600 People a Week Were Leaving New York City)
  - MichaelZuo 5y ago
    People in SF simply aren’t willing to pay that much for the shoe box condos/apartments necessary to reach manhattan density. That’s what the market is signalling. Because of course even the most die hard nimby would likely take a 8 figure buyout offer for their 7 figure home. If the developer could afford that and still profit, i.e. if they could then sell the units at thousands of dollars per square foot. If demand ever reaches that high then the market will move to a new equilibrium.
    - ChrisLTD 5y ago
      You can have large apartments in tall buildings. There just aren't enough high rise buildings in SF.
- marvin 5y ago
  My point is, the political leadership in most of these locations wring their hands and say "oh no, it's terrible, our janitors and nurses and families with little kids can't afford to live here, it's horrible" and then implement some sort of half-assed kludge that's only effective at giving naïve folks the impression that they care. Rent control would be one such measure. Other examples are loans with better-than-market terms for certain privileged buyers, publicly-built houses sold at lower than market rates and so on. The market reaching equilibrium for everyone and the local government saying "sorry, but screw you" to buyers is at least honest, if a little heartless from the voters who live there. I suppose it's fair enough as long as other markets with decent job options are available elsewhere. If not, I would classify it as a failure of democracy if a significant portion of society has no better option than to pay most of their productive output towards rent. This probably varies a lot by location; San Francisco wouldn't be the first example I'd use. Maybe Oslo.
  - deleted 5y ago
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- evnc 5y ago
  This makes sense in an economics-textbook kind of way; but systematically excluding low- and middle-income people from a given city would not turn out well in reality, I think. All cities need janitors, teachers, baristas, grocery clerks, garbage collectors, etc. in order to function, and those people have to live somewhere at least within a reasonable commuting distance to the city. You can't have all the garbage collectors move out to Bakersfield and have San Francisco _just_ be a citadel of software engineers, unless the software engineers haul their own garbage, or the garbage collectors in SF also get paid $100k+ per year.
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  - ahepp 5y ago
    Doesn't that dilemma also have an econ 101 answer though? The teachers, janitors, baristas, etc will move to the location that gives them a better quality of life. If they decide that's not San Francisco, they can move to a better city. If SF wants them back, SF can sweeten the deal for them. I guess it's kinda sad that not everyone who wants to live in SF gets to, but I'm not sure how "closing the door" is any more fair.
    - 8note 5y ago
      I don't think they actually have a choice though. In person jobs are available in specific locations
      - ahepp 5y ago
        I think that's an important issue. If there isn't a real choice about where to live, it's a much bigger problem. I guess I'm under the impression that the labor market is pretty tight across the country right now. I was under the impression that people had pretty good opportunities if they moved out of SF/Seattle/whatever, but I guess I haven't seen real data to back that up.

by marvin 5y ago

toomuchtodo 5y ago

What you call dysfunction I would call the market reaching equilibrium. The market is working efficiently if pricing signals cause housing seekers to look elsewhere due to limited supply or market clearing prices beyond their means. For example, not everyone can afford San Francisco, but there is a lot of buildable land besides SF in California (the Central Valley, for instance). Everyone should be housed, but it’s likely it might not be their first choice.

ChrisLTD 5y ago
I'd agree if San Francisco was full, but it's possible to build up and increase density so people can live close to their jobs. People per square mile: San Francisco: 17,246.4 Brooklyn: 35,369.1 Manhattan: 69,467.5
- toomuchtodo 5y ago
  Those jobs can be remote, and it is cheaper to encourage employers economically to support remote work than to reshape entire geographies with housing. Speaking of Manhattan: https://www.nytimes.com/2021/07/01/nyregion/manhattan-vacant-office-space-real-estate.html https://www.nytimes.com/2021/07/01/nyregion/manhattan-vacant... (Office Vacancies Soar in New York, a Dire Sign for the City’s Recovery; Nearly 19 percent of all office space in Manhattan has no tenants — the highest on record — as companies shed leases and embrace remote work.) https://www.bloomberg.com/news/articles/2020-12-05/even-before-covid-2-600-people-a-week-were-leaving-new-york-city https://www.bloomberg.com/news/articles/2020-12-05/even-befo... (Even Before Covid 2,600 People a Week Were Leaving New York City)
- MichaelZuo 5y ago
  People in SF simply aren’t willing to pay that much for the shoe box condos/apartments necessary to reach manhattan density. That’s what the market is signalling. Because of course even the most die hard nimby would likely take a 8 figure buyout offer for their 7 figure home. If the developer could afford that and still profit, i.e. if they could then sell the units at thousands of dollars per square foot. If demand ever reaches that high then the market will move to a new equilibrium.
  - ChrisLTD 5y ago
    You can have large apartments in tall buildings. There just aren't enough high rise buildings in SF.
marvin 5y ago
My point is, the political leadership in most of these locations wring their hands and say "oh no, it's terrible, our janitors and nurses and families with little kids can't afford to live here, it's horrible" and then implement some sort of half-assed kludge that's only effective at giving naïve folks the impression that they care. Rent control would be one such measure. Other examples are loans with better-than-market terms for certain privileged buyers, publicly-built houses sold at lower than market rates and so on. The market reaching equilibrium for everyone and the local government saying "sorry, but screw you" to buyers is at least honest, if a little heartless from the voters who live there. I suppose it's fair enough as long as other markets with decent job options are available elsewhere. If not, I would classify it as a failure of democracy if a significant portion of society has no better option than to pay most of their productive output towards rent. This probably varies a lot by location; San Francisco wouldn't be the first example I'd use. Maybe Oslo.
- deleted 5y ago
  [deleted]
evnc 5y ago
This makes sense in an economics-textbook kind of way; but systematically excluding low- and middle-income people from a given city would not turn out well in reality, I think. All cities need janitors, teachers, baristas, grocery clerks, garbage collectors, etc. in order to function, and those people have to live somewhere at least within a reasonable commuting distance to the city. You can't have all the garbage collectors move out to Bakersfield and have San Francisco _just_ be a citadel of software engineers, unless the software engineers haul their own garbage, or the garbage collectors in SF also get paid $100k+ per year.
- deleted 5y ago
  [deleted]
- deleted 5y ago
  [deleted]
- ahepp 5y ago
  Doesn't that dilemma also have an econ 101 answer though? The teachers, janitors, baristas, etc will move to the location that gives them a better quality of life. If they decide that's not San Francisco, they can move to a better city. If SF wants them back, SF can sweeten the deal for them. I guess it's kinda sad that not everyone who wants to live in SF gets to, but I'm not sure how "closing the door" is any more fair.
  - 8note 5y ago
    I don't think they actually have a choice though. In person jobs are available in specific locations
    - ahepp 5y ago
      I think that's an important issue. If there isn't a real choice about where to live, it's a much bigger problem. I guess I'm under the impression that the labor market is pretty tight across the country right now. I was under the impression that people had pretty good opportunities if they moved out of SF/Seattle/whatever, but I guess I haven't seen real data to back that up.